How much interest will there be in the second payment on a fully amortized loan of $240,000 at 8% interest payable $1,800 per month?

Question

Quizplus · Accepted Answer

To find the interest on the second payment, we first need to calculate the principal paid in the first payment.

The monthly interest rate is 8%/12 = 0.00667
The principal paid in the first payment is $1,800 - ($240,000 x 0.00667) = $1,579.20

Now, we can calculate the remaining balance on the loan after the first payment:

Remaining balance = $240,000 - $1,579.20 = $238,420.80

To calculate the interest on the second payment, we can use the formula:

Interest = Monthly rate x Remaining balance

Monthly rate = 8%/12 = 0.00667
Remaining balance = $238,420.80

Interest = 0.00667 x $238,420.80 = $1,598.67

Therefore, the answer is B) $1,598.67.

How Much Interest Will There Be in the Second Payment